Port Authority Toll and Fare Hikes May Be on Fast Track to a Veto

Questioning past mismanagement and overspending, Governors Christie and Cuomo are not expected to approve the Port Authority's huge increase to pay for a $33 billion capital plan that has yet to be developed.

The Port Authority's billion-dollar toll hike proposal is on a fast track through public hearings today and slated for approval by the Port Authority board Friday. But look for Gov. Chris Christie and his New York counterpart, Andrew Cuomo, to slam on the brakes.

In fact, New Jersey Democratic leaders have suggested that it is hard to regard the hastily assembled plan as anything more than an elaborate political exercise designed to elicit a storm of protest over the Port Authority’s demand for unprecedented toll and fare hikes from economically strapped commuters. That would give political cover to Governors Christie and Cuomo to say they held the line on outrageous fare hikes by insisting on lower increases instead.

Christie’s insistence that he was shocked by the size of the increase -- and that he didn’t know how big it would be until two days ahead of time when David Samson and Bill Baroni, whom he appointed as Port Authority chairman and deputy executive director, told him -- was ridiculed by Democratic leaders.

When the Port Authority announced its plan to hike its $8 bridge and tunnel tolls to $12 in September and $14 in 2014 and to raise PATH train fares from $1.75 to $2.75 on August 5, Christie and Cuomo were ready to go with a joint press release that same day, questioning the wisdom of such large increases in a recessionary economy and suggesting that all governments, including the Port Authority, needed to learn to live within their means.

What was startling was not that Republican Christie and Democratic Cuomo, who have made national reputations as cost-cutters, were ready so quickly to question a plan put together by their own appointees. The surprise was that the Port Authority seemed so unready to publicly defend it.

Bad News?

Instead of holding a major press conference with the usual array of budget data and charts, the Port Authority brass issued a three-page press release on a Friday afternoon -- long considered the best day to release bad news -- and essentially has gone into a bunker ever since, hiding behind a steady stream of endorsements from building trades unions and mass-transit advocates.

Christopher Ward, the Port Authority’s executive director, finally broke nine days of silence by Port Authority senior officials yesterday afternoon by issuing a written statement defending the increase as "absolutely necessary." He said the agency had "considered lesser increases," but concluded that a $2 toll increase in September and a second $2 increase in 2014 would not provide "reasonable assurance" that tolls would not have to be increased again in the near future.

But neither Ward nor any other Port Authority senior official has given an interview, no budget data or revenue projections have been released other than the three-page press release (this from an agency whose last budget document was 118 pages long), and Port Authority officials are unlikely to answer substantive questions about their plan at today's public hearings, even during the online hearing scheduled for this afternoon.

In fact, it would be hard for angry motorists and PATH riders to come up with intelligent questions: The Port Authority has not laid out how it plans to spend the estimated $9.5 billion that would be raised over the next decade through the toll and fare hikes nor has it provided any long-range revenue projections.

New Capital Plan

The $9.5 billion revenue increase will be part of a new $33 billion capital plan for the years 2012 to 2021 that will be developed by the Port Authority only after the toll and fare hikes to pay for the program are approved.

Presumably, the new 10-year capital plan would be part of the 2012 Port Authority budget document, and it would be that plan that the Port Authority would present to Moody’s, the bond-rating agency that warned last winter that it would lower the Port Authority’s credit rating if it did not resolve its revenue-to-spending shortfall.

Meanwhile, all that the Port Authority is prepared to say publicly is that five projects totaling $4.5 billion are "contingent" on the toll hikes: replacement of the 75-year-old suspender cables on the George Washington Bridge ($1 billion), replacement of the Lincoln Tunnel entry helix ($1.5 billion), raising the Bayonne Bridge to accommodate deeper-draft cargo ships ($1 billion), construction of a new bus garage at the Port Authority Bus Terminal ($800 million) and new security barriers and other security upgrades at the three airports ($360 million). The PATH fare hikes, the agency said, would be dedicated entirely to PATH projects, including replacing 340 cars, upgrading security and signal systems, and adding 10-car platforms to refurbished stations.

Overall, sources said, up to 240 projects could be eliminated or scaled back if the toll hikes do not go through.
But many of these projects, both large and small, were part of the original $29.5 billion 10-year capital plan for 2007 through 2016 that was scaled back to $24.5 billion in the wake of the Great Recession. Their inclusion in the press release does not answer questions raised by Christie and U.S. Senator Robert Menendez (D-NJ), in particular, about Port Authority spending decisions made over the past decade.

Menendez has called for a full audit, and Christie has blamed past "mismanagement" by Port Authority officials for cost overruns at the World Trade Center, in particular.

Ward, appointed executive director of the Port Authority by former New York Gov. David Patterson, acknowledged in a recent New York Times interview that the World Trade Center will cost $3 billion more than expected, that the 1,000-per-square-foot cost is twice the average, that it will be decades before the project makes money, and that "you would never build this if you were a private developer."

A Mystery

But the actual cost of the World Trade Center project to the Port Authority is still a public mystery. As of late yesterday afternoon, Port Authority officials were still unable to respond to a Friday question posed to spokesman Ron Marsico about how much of the projected $11 billion cost of the project would be covered by federal grants and insurance settlement funds, and how much would have to come out of Port Authority funds -- and thus out of the pockets of motorists, airline passengers or ships using the port.

If Christie, U.S. Senators Menendez, Frank Lautenberg (D-NJ) and Assembly Transportation Committee Chairman John Wisniewski, the Middlesex County Democrat who doubles as state party chairman, have been more vocal than Cuomo in their drumbeat of criticism of the Port Authority toll and fare hikes, it is not surprising because New Jerseyans pay at least 55 percent of bridge and tunnel tolls and 80 percent of PATH fares.

Normally, Port Authority capital spending is split evenly between New Jersey and New York projects through an "understanding" that goes back to the beginning of the agency. But with the World Trade Center being treated as a special project -- and not part of the usual 50-50 split -- New Jersey officials have been asking harder questions than usual about Port Authority spending, even though the WTC project is seen more as a patriotic imperative than a business venture. So far, they have not been given answers, and Christie has said he will need more information before approving any increase.

Politically, however, Christie may need the Port Authority spending more than Cuomo does because not only does New Jersey lag behind New York State in job creation and revenue growth, but also because New Jersey's gas tax is just 14.5 cents per gallon – one of the lowest in the nation – and far below the 43 cents per gallon that New York collects to fund transportation projects.

Christie has absolutely ruled out an increase in the gas tax and pushed through a five-year Transportation Trust Fund last year built on using redirected toll increases from the New Jersey Turnpike Authority and capital funding from the Port Authority to provide most of the matching funds needed to continue to draw down the maximum amount of federal transportation funding for capital projects. That includes more than $1.3 billion in New Jersey Turnpike money and $1.8 billion in Port Authority funds originally set aside for the proposed ARC (Access to the Region’s Core) rail passenger terminal under the Hudson that Christie cancelled because he was worried that New Jersey would be on the hook for expected cost overruns.

Special Class

"We are relying increasingly on toll payers as a special class to pay for projects that would normally be underwritten by taxes paid by all users such as the gas tax," noted Martin Robins, the respected former director of the Alan M. Voorhees Transportation Policy institute, who nevertheless supports the Port Authority proposal because he believes that it is the only politically viable option to fund needed transportation projects.

While the Port Authority welcomes the support of mass-transit advocates like Robins, it is counting on the support of the building trade unions to persuade Christie to back a substantial toll and fare hike. Christie has built a national reputation among conservatives by attacking teachers unions and other public-sector unions, but he has enjoyed a close relationship with the building trades and especially with key legislators like Senate President Stephen Sweeney (D-Gloucester) and Senator Donald Norcross (D-Camden). Sweeney and Norcross, both longtime building trades union officials, took the lead in passing legislation increasing public employee contributions to cover their pension and health benefit costs and stripping public employees of the right to bargain over healthcare issues for the next four years.

All of the building trades unions have mobilized to support the Port Authority toll and fare increases as the only large-scale economic stimulus package likely to be implemented in the years ahead, making Christie’s decision about just how large a toll and fare increase to support a politically sensitive one for the Republican governor if he is counting on the support of the building trades for a 2013 reelection campaign.

Mark J. Magyar teaches labor studies at Rutgers University and covers fiscal policy issues for New Jersey Spotlight. A veteran Statehouse reporter, he served as deputy chief of policy and planning for Governor Whitman and as policy director for the independent Daggett for Governor campaign in 2009.